ST is increasing its capex plan from $600 million in 2016 to $1.1 billion in 2017 on the back of an increased demand projected in 2H17 for a number of its products.
During STMicroelectronics NV's analysts' day, the company revealed that it is planning to spend $1 billion–$1.1 billion on capital expenditure in 2017. Although the details of the planned expansion were not disclosed. Carlo Bozotti, CEO of ST, also told the analysts that upgrading ST's 200mm wafer fab at Crolles to 300mm wafer processing is also a possibility.
Carlo Ferro, chief financial officer of ST, delivered the news that the capex plan for 2017—to spend up to $1.1 billion up from about $600 million in 2016—was under review with a possible increase to support higher demand than previously anticipated in 2H17, and beyond. However, both Bozotti and Ferro stressed that ST's capex-to-sales ratio would be kept below 10 per cent on average over the course of a multi-year economic cycle.
ST announced the 2017 capex expansion at the beginning of 2017 as part of its fourth quarter 2016 financial results saying it was needed to support a "major product ramp" in the second half of the. Many observers have taken that to mean ST has grabbed a significant design win in Apple mobile phone introductions expected in September and/or October.
ST stressed at the analysts' day that it was demand for a number of its products that has driven its strong revenue expectations for 2H17 and the need for increased capex. Ferro said the capex plan was under review because that strength was broadening and more product categories were now also looking stronger.
In the question and answer session at the end of a morning of presentations, Bozotti was asked about ST's plans for its next 300mm wafer fab. Bozotti, who is due to step down as CEO at the end of June 2018, did not dismiss the idea. Bozotti said: "Getting Crolles to 5,000 wafers per week is the top priority. We do have an opportunity to make another step at Crolles. In the longer term a company like ST the model is to have a bigger 12-inch wafer footprint. We have fabs that run 8-inch wafers, so smartpower could go to 12-inch.
"We have number of technologies that are proprietary and that we will manufacture: embedded flash, specialist image sensors, FDSOI for RF and with phase-change memory, power silicon-carbide, BCD smartpower, and MEMS for sensors and actuators. What we will not do is go down to 14 nm," Bozotti said.
Bozotti said back in May 2015 that ST would not compete in the digital IC manufacturing race.
"But in the long term we will have 12-inch BCD and that can be done by extension and conversion. That will not cost billions of dollars. It is part of the evolution of the technology. As is BCD with embedded flash." However, Bozotti also said that ST is starting to outsource manufacturing of its BCD process to a foundry. "Remaining balanced is important. Automotive we do not out-source."